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Issue: Arbitration clauses in employee handbooks

By Don Cruse

Earlier this week, the Texas Supreme Court requested full briefing on the merits in Brenda Hatton v. D.R. Horton, Inc., No. 10-0221 (DDB). That was the Court’s first such request of the new term. (As of this writing, it stands alone in the sidebar, as the only such request. That will surely change in the next few weeks.)

The Hatton case concerns the enforceability of arbitration clauses in employee handbooks. In this case, the employer is alleged to have disclaimed any attempt to bind itself by the handbook, and stated that it reserved the right to change those terms unilaterally and without prior notice.

The legal question is whether that forms a binding arbitration agreement, or whether it is illusory. The court of appeals concluded that it was binding.

Although arbitration clauses are sometimes treated differently than more mundane contract provisions, interest in this case seems to follow on last term’s decision in Vanegas v. American Energy Services, No. 07-0520 (DDB), about when a promise made to at-will employees can be enforced, as well as the case that will be heard at oral argument this about what consideration is needed to support a non-compete provision in an employment agreement, Marsh USA, Inc. v. Rex Cook, No. 09-0558 (DDB).

A request for briefing on the merits in Hatton means at least three Justices thought this question was interesting enough to hear more. So stay tuned.

Full post as published by Supreme Court of Texas Blog on September 30, 2010 (boomark / email).